Growing Income Gap

• changes in households
• changes in the labor market
• rapid changes in technology
• the growth of a global economy

• Married couples living with their children have made up a large percentage of the wealthier households in the U.S. - well-paid men and women tend to marry each other, concentrating wealth in one household and boosting income at the top of the income distribution
• Single parent and single person households tend to have lower incomes resulting from:
  • Higher divorce rates
  • More out-of-wed-lock births
  • Increasing numbers of people who live alone

• Heavy corporate downsizing and restructuring increases unemployment and causes many workers to settle for lower-paying jobs
• The decline in the real value of the minimum wage due to inflation and the increased use of temporary workers, who generally are paid less and receive fewer fringe benefits, have also contributed to lower income levels
• Labor union memberships have decreased, causing workers to lose an important means of negotiating salaries with employers

Changes in Technology

• Rapid changes in technology have led to a drop in demand for lower-skilled workers
• This has lowered income levels for the bottom 20% and helped boost incomes for the top 20%
  • Income levels reflect education because technological changes make advanced education a necessity

• The economy is becoming more global so U.S. companies are relocating production to other countries, where laborers will work for less pay
• As a result, the demand for unskilled workers in the U.S. has decreased, and low-skilled workers in the U.S. find it harder to find employment causing them to end up at the bottom of the income distribution

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